Employment Figures Collapsing

December 08, 2015

The Hon. D.W. RIDGWAY (Leader of the Opposition) ( 14:22 :52 ): I seek leave to make a brief explanation before asking the Minister for Employment, Higher Education and Skills a question about employment figures.

Leave granted.

The Hon. D.W. RIDGWAY: Yesterday, the Treasurer, the Hon. Tom Koutsantonis, released the Mid-Year Budget Review for the 2015-16 state budget. The Mid-Year Budget Review shows employment growth collapsing from a forecast 1 per cent to less than one-quarter of 1 per cent at a time when South Australia's level of unemployment is the worst in the nation and, sadly, getting worse. My questions to the minister are:

1.In the light of South Australia having the highest unemployment rate in the nation, the lowest ranked business conditions on several measures, and collapsing employment growth forecast, why has the Labor government failed to deliver on payroll tax reform in its Mid-Year Budget Review?

2.What representations has the Minister for Employment made in relation to reducing the payroll tax burden for South Australian businesses that want to create jobs but are unable to bear the cost of this jobs tax?

The Hon. G.E. GAGO (Minister for Employment, Higher Education and Skills, Minister for Science and Information Economy, Minister for the Status of Women, Minister for Business Services and Consumers) ( 14:24 :00 ): I thank the honourable member for his most important questions. The Mid-Year Budget Review has been handed down with a number of outcomes. Economic and employment growth forecasts have been revised down since budget time.

In addition, a significant reduction in commodity prices resulting from increased global supply in mineral resources and falling demand from China have resulted in resource companies having to scale back their investments and pursue efficiencies. We have seen that this has resulted in significant job reductions in the resources and construction sectors in particular, with significant job losses also associated with Alinta Energy's closure of the Leigh Creek mine and the Port Augusta power station.

We have seen these things operate. We know that the Department of the Premier and Cabinet prepares these economic forecasts for the budget using a number of data sources, and the professional judgement of economists as well. The process is independent of advice from the Department of State Development and it is not recommended that the forecast be used for other purposes, such as reporting against targets and the like.

The principal purpose of the forecast is to assist the government to estimate revenues in particular, and so they are inherently fairly conservative. Employment forecasts incorporate population projects by the Department of Planning, Transport and Infrastructure, labour force participation rate projections from the commonwealth Intergenerational Report (adjusted for South Australia) and as an assumption of the return to full employment. An allowance for the automotive and associated supply chain losses is incorporated.

Obviously, jobs are the single highest priority for this government, as indicated. It is our highest priority and one which we have incorporated a number of measures around. For instance, in the Mid-Year Budget Review itself, we see that a number of economic development measures are being incorporated—$518 million of state-funded measures.

These measures include the Northern Connector road project, in partnership with the commonwealth (the state component being, I understand, $197 million, the commonwealth component being $788 million). We have seen the announcement of $208 million for an additional 1,000 Housing Trust homes over the next three years—1,000 houses in 1,000 days—which will be funded from existing housing stock. We know that, given the problems that our construction industry is facing at the moment, those 1,000 houses in 1,000 days will operate as a significant stimulus for creating work and jobs in that space.

We also see that $24.8 million is to be brought forward, and part of that is effective immediately, in terms of the reduction in non-residential conveyancing duty. It was planned for 1 July, and it is now to take effect immediately. I understand that now means that South Australia is officially the lowest cost for business transactions of this nature in Australia—

Members interjecting:

The Hon. G.E. GAGO: The lowest cost for business structure. Of course, not only have we done that just in the Mid-Year Budget Review, but in the last budget we announced a whole raft of tax reforms that we were prepared to look into, and will continue our commitment there. In the Mid-Year Budget Review, we also saw $88 million over four years for a range of measures that we believe will also act as means of accelerating business activity, and therefore jobs.

The government announced $20 million for the new PACE copper initiative, and $19.2 million for Last Mile Road Projects to improve freight access. We know that a lot of our country people have been asking for that Last Mile work to be done for some time, so we will be rolling that out. There is $12 million for new infrastructure at Tonsley, $10 million to further support intergenerational engagement activities, $6.4 million in critical bridge repairs and $6.4 million for the Regional Development Fund. We know that that Regional Development Fund has had a significant role in helping to stimulate business activity in our regions and produce jobs.

We can see, as I said, a raft of things that have been put in place. That is why we have our economic plan that is underpinned by 10 economic priorities, to help us transition from the old economy to a new economy. We are reducing barriers to investment, building on our capabilities and driving growth in key sectors, for instance, premium food and wine, tourism, health, ageing and education and the like. We are also making targeted investments, as I have indicated, in housing and transport infrastructure to help stimulate particularly the construction industry, to help boost productivity and to create jobs.